How Oracle Capex is driving Customer Opex Model Opportunities

Over the last few years, we’ve learned that one of the greatest appeals of the move to the cloud is that the providers’ capital expenditures enable users to focus their budgets on operational expenses. After all, a standard on-premise approach can require you to purchase, install and maintain the software and hardware, while also spending on infrastructure and personnel to manage upgrades, service packs, network issues, hardware and software issues, backups and compatibility problems. With the cloud model, the provider covers those upfront costs and manages those tasks. And based on the latest results, those investments are paying off for Oracle as a cloud provider.

The headline from their recent quarterly announcement was the rise in cloud service revenues; in fact, Oracle projects that PaaS and Saas will see increases of 50% for the year. But the real story might be that the ROI is just starting to kick in. CEO Safra Catz sees Paas and Saas cloud margins doubling over the next two years, as Oracle’s huge upfront capital spending on cloud data centers tapers off, resulting in potentially higher profits from the previous capital expenditures. As Rob Preston phrased it in a recent Forbes BrandVoice article, “Oracle is still in the early innings of the cloud game.”

Oracle Cloud 4

Perficient has delivered its own unique perspectives on new developments in cloud EPM. Users can derive many similar benefits from Cloud ERP and other solutions as well. Recently, consultant and TechTarget writer David Turbide addressed how the Opex model has a special appeal to SMBs: “Increasingly, cloud-based ERP is becoming the choice for midsize manufacturers because of the financial advantages (swapping capital expense for operating expense), faster time-to-benefit, and the outsourced IT aspect that coordinates well with the limited IT resources and capabilities found in smaller companies.” Whether it’s EPM, ERP, CX, or other needs, when it comes down to benefits, it appears that users are in the early innings of the cloud game as well.

Safe Harbor Statement: Statements in this article relating to Oracle’s future plans, expectations, beliefs, intentions and prospects are “forward-looking statements” and are subject to material risks and uncertainties. Many factors could affect Oracle’s current expectations and actual results, and could cause actual results to differ materially. A discussion of these factors and other risks that affect Oracle’s business is contained in Oracle’s SEC filings, including Oracle’s most recent reports on Form 10-K and Form 10-Q under the heading “Risk Factors.” These filings are available on the SEC’s website or on Oracle’s website at All information in this article is current as of September 17, 2015. Oracle undertakes no duty to update any statement in light of new information or future events.

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Daniel Rabbitt

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